Report Calls for End of N.C. Broadband Restrictions

Electric cooperatives offer a promising way for small cities and rural areas in North Carolina to build access to high-capacity broadband. But state laws hamper those efforts, and large commercial providers are in no hurry to fill the gap, according to the Institute for Local Self-Reliance.

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North Carolina’s small-city and rural residents could be a lot further along in adopting higher-capacity broadband at home if the state would ease laws that restrict phone and power cooperatives’ participation in the internet business, according to a new report.

Commercial internet providers are making progress with fiber-to-the-home and other high-capacity services in major urban parts of North Carolina, the report says. But in rural areas, fiber and higher-capacity build outs are few and far between, the report says.

The big exception is areas that have cooperatives that have gotten into the broadband game.

“Examining the rural areas with high-quality access shows a common denominator: cooperatives,” said the report, which was written by H.R. Trostle and Christopher Mitchell of the Institute for Local Self-Reliance.

“North Carolina has eight telephone cooperatives and each of them has already invested in fiber-optics; six of them have already replaced or aim to replace all their old copper with fiber-optics. Some of them are bringing fiber-optics to nearby areas outside.”

The report says its not just telecommunications cooperatives that have the potential to help rural areas make progress on high-capacity broadband. Electric cooperatives may also provide internet service, but – like phone cooperatives – they can’t expand internet hook-ups beyond their primary service area. Additionally, state law prohibits power cooperatives from accepting federal loans or grants for internet projects and limits the amount of capital they may invest in communications services. The report recommends repealing those state laws.

The Institute for Local Self-Reliance is a national organization, and its focus on North Carolina came from a couple of factors, said Nick Stumo-Langer, communications manager. First, the state was part of a Federal Communications Commission decision to undo state bans on municipal broadband. In 2015 the FCC sided with Wilson, North Carolina, in the city’s fight to expand its its broadband network beyond its current service area. The FCC ruling was overturned in federal court earlier this year and has not been appealed. Twenty-one states have some limitations on publicly owned broadband providers, though most states have legal avenues for local governments and cooperatives to provide some level of service, according to a report by Craig Settles.

The other thing that made North Carolina a good choice for study is that 2.5 million, North Carolinians – or about 10 percent of the state’s population – are served by 26 electric power cooperatives, making a large potential service area for cooperatives.

Purple areas are within an electric co-op service area but lack fiber-to-the-home internet service. These are areas that could benefit most from removing restrictions that make it harder for power co-ops to provide internet service, according to the report.

The report says large commercial providers like Comcast, Time Warner, and AT&T have been slow to build out high capacity broadband to rural and other underserved areas. And there’s limited competition to encourage them to do more. The state’s two major cities, Charlotte and Raleigh, have three high-capacity internet service providers each. Mid-sized cities and some within the tech-heavy Research Triangle of Raleigh, Durham, and Chapel Hill have two such providers. Most cities on a list of recent expansions have only one provider.

The report also criticizes large commercial providers for cherry-picking wealthier neighborhoods and leaving low-income residents behind.

“It is worth noting that none of the large firms have committed to serving entire cities — they each pick and choose neighborhoods to serve using various criteria. Lower income urban neighborhoods, which often have low levels of broadband adoption, may not see the investment that higher income areas do.”

The report provides examples of two North Carolina power cooperatives that have created or are creating fiber-to-the-home networks – Blue Ridge Mountain co-op in southwest North Carolina and the Lumbee River co-op in the southeast.

Electric co-ops in other states are also in the business, according to Electric Co-op Today, an industry publication. The September regional meeting of the National Rural Electric Association had a session on power co-ops that provide broadband service. The session featured another North Carolina power co-op, Roanoke Electric, located in the northeast part of the state. The session emphasized the importance of co-ops hiring technical expertise to help them move into the new service to their members and the need to get legal help in dealing with state laws.